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Mallaby on Social Security

If you're looking for a token of how blinkered the Beltway conventional wisdom on Social Security is, look no further than today's Sebastian Mallaby column, which is an exemplar of the genre. It's exemplary because Mallaby is neither a hack, a moron, nor an ideologue. He's a smart, well-meaning, moderate kind of guy who, typically of Washington's smart, well-meaning moderates totally fails to comprehend what's going on here.

It all starts with him not seeing that whether or not to phase-out Social Security isn't a compromisable issue. He doesn't grasp that phase-out measures have a dynamic impact and that especially when they're implemented by people who would like to totally phase-out Social Security but don't believe they can get away with it, the natural result is total phase-out. He doesn't see that, for example, while the immediate impact of price indexing would merely be a mild benefit cut, the long-term effect would be to reduce the Social Security replacement rate to zero and produce ever-increasing pressure for phasing-out the remainder of the program. Nor does he understand that even a privatization plan that promises not to cut benefits for today's elderly will, in fact, most likely lead to benefit cuts for today's elderly.

Partial phase-out is a perfectly reasonable thing to propose if your ideal for a world with no Social Security, in which people just rely on 401 (k) plans for their retirement. It's a non-starter if you want to save Social Security.

That's why Democrats won't compromise on phase-out and shouldn't compromise on phase-out. The only other kind of proposal you could put forward is a proposal for pre-funding. There's nothing wrong with pre-funding as such, but historically it's proven to be a scam for cutting taxes on the rich and raising them on the poor. I'd be happy to cut a pre-funding deal with Sebastian Mallaby, but he's not the one on the other side of the table. You can't make an agreement to pre-fund unless both sides can credibly agree to stick to the pre-funding deal. The Republican Party has no ability to do this, so, as with a partial phase-out, it's a non-started.

On policy, Mallaby sticks with the dogma that something "must be done" about the Social Security deficit. It's certainly true that if such a deficit actually emerges in the future, something will need to be done about it then. But this is very far from being the most pressing budgetary problem facing the country. What's more, trying to close the Social Security deficit today poses conceptual problems -- to wit, the pre-funding dilemma. By contrast, closing the General Fund revenue-expenditure gap poses no such problems and would lay the groundwork for a Social Security solution in the future.

And then there's the politics -- my God the politics! Mallaby insists, contrary to all the evidence, that Democrats will pay a price for opposing the president's grossly unpopular plan and that this price could be lowered by proposing tax hikes and benefit cuts. This is almost too silly to be worth responding to. It does, however, raise the time-honored question of why the Washington press corps hates Social Security so much. Why, in particular, they hate it so very much that they dogmatically believe the American people to hate it, too, even when they evidently don't. It has something to do, I suppose, with the fact that journalism is a profession that's almost uniquely sheltered from the risks Social Security is supposed to guard against. You can keep working as a pundit at a very old age. Even severe physical disabilities of the sort that Social Security offers protection from need be no major impediment. If I lost my left leg tomorrow, that would suck in a whole bunch of ways. But I could keep on working much more easily than could most people. And I could keep on doing it at the age of 67 or 77 or even 87 should I be so lucky as to live that long.

But we can't just design public policy for my convenience (or Mallaby's).

1) President Bush broke his promise to use our Social Security Tax Surplus to pay down the Debt.
2) Instead, Bush has spent our ENTIRE SS Tax Surplus plus another $2 Trillion on corrupt corporate welfare and tax cuts for the wealthy.
3) Protecting SS future requires sound fiscal policy today.
4) Bush needs to rescind his tax cuts for the wealthy, end corporate welfare and fix his broken budget to protect SS.
5) The Bush private accounts will bust the budget.
6) Until Bush fixes his budget any discussion about radical makeovers of SS are worthless.
7) The only fix SS really needs is a return to sound fiscal policy.

It does, however, raise the time-honored question of why the Washington press corps hates Social Security so much. Why, in particular, they hate it so very much that they dogmatically believe the American people to hate it, too, even when they evidently don't.

The Washington press corps -- at least, the parts that set the agenda -- is compromised of people of considerably above average income and employment security who are among the class of people that least need a completely portable, guaranteed defined-benefit pension.

They therefore oppose it in their own self-interest. And they have the power to create political realities by writing the conventional wisdom -- and that's the power they attempt to exercise by squawking that America hates it, hoping that if enough people read and hear that everyone hates it, they will hate it.

Some of them probably aren't so manipulative, but hearing things enough from everyone in their peer group makes them tend to think they are true. And those are probably the most effective at selling the idea, since they actually believe it themselves.

I don't believe that Mallaby is a "smart, well-meaning, moderate guy." I think he just plays one on TV. Mallaby's role (chosen or assigned) is to steer a course between the two parties. On any issue he will formulate a "middle ground."

He's smart? Clue me in here if you can. I always thought there was a strong correlation between intelligence and grasping concepts. According to MY, Mallaby fails to grasp both the politics AND the policy involved here. What exactly is "smart" about that?

And MY suggests that this is "typical"; Washington is replete with "smart" pundits who do not have a rudimentary grasp of the subject upon which they pontificate.

MY calls this "blinkered". I'm not sure why. I'd call it what it is. Dumb.

Well, apparently these days many (most?) journalists are on WH payroll. You write a good column - you get paid by your "news"paper and by the Bushies. If this is not smart, I don't know what is. Furthermore, if you write a bad column, bad things may easily happen to you. You have to be smart in this business.

1) the rather mundane, yet still humorous - Mallaby's contention that the Democrats are going "to pay a political price." Those words hit the WaPo editorial page mere hours before the same WaPo releases a poll showing Bush's rating on SS hits an all time low and 58% of Americans dislike Bush's plan the more they here about it.

2) I find it amazing that Beltway "CW" is so completely gormless about how politics (specifically American politics in the present tense) actually work. Politics is not simply a bunch of well-meaning wonks sitting around a table banging out sensible legislation in the public interest. Indeed, I would say it has very little to do with this. Maybe this was what Washington was like 20 or 30 years ago, but not anymore. Politics is about ideology, party, and power. The GOP has known this at least since '94 and the Democrats more recently. The reason Mallaby can write such a clueless column is because he doesn't believe/see that the GOP operates with these questions foremost in mind. Thus, to Mallaby, the Democratic response to SS likewise makes no sense as he doesn't understand the larger ideological struggle that is fundamental to this debate.

They hope to ride the Republican "attack" on Social Security to victory in the midterm elections, but what if this scheme backfires? What if they get painted as dishonest hacks, who cynically lied to the electorate about the urgency of reform and who thereby condemned citizens to nastier reforms later?
Is Mallaby serious? "urgency of reform"?!??!?!?

On the list of things that are urgent and could bankrupt the treasury, Social Security ranks well behind Medicare and debt service. The current budget deficits will kill us long before 2042.

As for the political ramifications of the Democratic strategy, he's only right if the press buys the GOP spin... and Mallaby sure as hell has.

Here is the only Democratic solution that should be offered: "Payroll taxes will be collected on every penny of earned income, including wages, dividends and capital gains (with the exception of homes sales up to $500K)."

This will allow the current promises to be kept as well as shore up Medicare.

One day I hope all smart people, such as Matt, recognize that knee-jerk center-rightism does not make you a thoughtful moderate. More often that not it makes you a dishonest hack, no matter how nice a guy you seem.

Luckily, the numbers in this crowd seem to have diminished to Joe Klein, but the other "side" of beltway CW that bothers the hell out of me are these center right Dems who haven't realized that it isn't 1996 anymore. Clinton isn't president. The political ground is fundamentally different. NOt to say that I'm against moderate Dems and compromise, because I'm not. Indeed, I don't believe the half-baked idea that the Dems need to provide a "clear alternative" (read more left wing alternative) to win elections. Because on any number of issues, I think this is wrong. But SS (and economic affairs more generally) are not one of them. Indeed, I would love it if the GOP continues to pick debates like these, because this is a circumstance where polarization works in the Democrats favor.

to modify Atrios slightly: i can imagine honest center-rightists (the republican party used to be full of them, primarily in the northease), but pundits who believe that center-rightism represents an honest plague-on-both-your-houses-i'll-split-the-difference are just hacks or stupid or both.

as for the problems of beltway pundits, in addition to the issues already noted, they also, effectively, have tenure. There is no punsihment that i have ever seen meted out to a pundit for being consistently stupid, wrong, or mendacious. This isn't how most of life works....

Egregiously hacktacular column from Mallaby. I skimmed through it this morning, before MY posted this, and I thought, "wow, this is practically a parody of the idiotic CW that Josh Marshall, MY, and others have been skewering for over a month."

Well I was going to respond how I am not a pundit, or columnist, but just my average amount of reading THE PAST TWO MONTHS has clued me in, so Mallaby seems incompetent or stupid to me, but I think abb1 has clued me in as to his rationality.

No need to go to mallaby for an example of blinkered conventional wisdom , or what Wm. Greider used to call crackpot realism. Just check out the latest from Matt's Tapped pal Garance. Who does she think she's impressing?

Matt - as usual, good post but you concede too much when you say we'll need to do something about the deficit if one ever appears. We do know that when the SSTF reserves peak and start to be drawn upon - around 2022 or so, the peak will be when reserves hit circa $8 trillion. And as you bank account analogy so ably puts, you are not broke when you have $8 trillion in the bank. But yes, we will have deficits from 2022 to 2052. That's the whole point of prefunding - which was the latest in a long line of great posts on this. I hope David Altig (macroblog) read that one.

cmdicely, I'll take a stab - I think the Washington Press Corps thinks SS is vaguely socialist, and very complicated. Well paid, and not necessarily interested in a defined benefits retirement system, they are also part of the fairly well off service economy that isn't necessarily opposed to socialism, just doesn't see the necessity or the utility. That, combined with SS perceived complexity, is the fertile ground for the right to vaguely speak of SS in "crisis" and needing "change" and people generally nodding their heads. It's also that seniors are in many places effectively segregated from younger generations, so the people who can speak knowledgably about actual experiences with SS are removed from the people deciding and reporting.

I tend not to get angry because I think Dems have been ready to respond to these things, and GOP overconfidence that Dems wouldn't respond has led them to overreach. Which means that for another 5-10 years, people will actually understand what SS is and be vaguely in favor of it. And that may well reverse the congressional trends.

PS yes, SS is vaguely socialist. It's income redistribution. And that's not necessarly a bad thing.

For a less forgiving view of Mallaby's column, see www.dailyhowler.com.

And anyone who thinks that Social Security is "socialist" might be interested to know that it's modeled on Germany's social insurance scheme, implemented by Otto von Bismarck in 1889. Take a look at his picture, here, http://www.ssa.gov/history/ottob.html, and write back if he looks like a socialist to you.

I don't believe the half-baked idea that the Dems need to provide a "clear alternative" (read more left wing alternative) to win elections. Because on any number of issues, I think this is wrong. But SS (and economic affairs more generally) are not one of them. Indeed, I would love it if the GOP continues to pick debates like these, because this is a circumstance where polarization works in the Democrats favor.
Yup.